DBS net profit inches up 1% to $1.2b in Q1

Thanks to a growth in net fee income.

Singapore banking giant DBS reported a slight improvement in overall bottom line for the past quarter ending in March, up 1% to $1.2b.

This came as the group recorded strong yields in net fee income, which rose 16% to $665m. This was on the back of the 26% increase in wealth management fees to $222m due to the stronger sales of unit trusts and other investment products.

Meanwhile, DBS's total income rose by a measly 1% to $2.89b, whilst expenses dropped 1% to $1.25b.

Net interest income remained the same at $1.83b. Higher loan volumes, which has seen a 7% growth in constant-currency terms to $298b offset the impact of softer SGD interest rates.

Meanwhile, non-performing loan formation, which had been elevated in recent quarters due to stresses in the oil and gas support services sector, moderated and was offset by recoveries and write-offs.

Here's more from the group:

Compared to the previous quarter, the amount of non-performing assets fell slightly to SGD 4.83 billion. The non-performing loan rate was unchanged at 1.4%. Non-performing loan formation, which had been elevated in recent quarters due to stresses in the oil and gas support services sector, moderated and was offset by recoveries and write-offs. Specific allowance charges amounted to SGD 200 million or 26 basis points of loans, compared to 38 basis points for full-year 2016. Allowance coverage was at 103% and at 217% when collateral was considered.

Deposits rose 7% from a year ago and were stable from the previous quarter in constant-currency terms to SGD 342 billion. The liquidity coverage ratio was 138%, above the regulatory requirement of 100% due in 2019. The net stable funding ratio was above the regulatory requirement due in 2018.

The Common Equity Tier-1 ratio rose 0.5 percentage points from the previous quarter to 14.6%. The increase was due to higher retained earnings and a decline in risk-weighted assets due partly to currency effects. The leverage ratio of 7.9% was more than twice the minimum of 3% currently envisaged by the Basel Committee.

DBS CEO Piyush Gupta said, “We have had a good start to the year. Earnings were maintained at the quarterly high achieved a year ago as business momentum and productivity gains were sustained, offsetting the impact of a lower net interest margin. Our business pipeline is healthy, consistent with the recent improvement in economic data for key markets. While asset quality pressures appear to be moderating, we remain vigilant to continued headwinds in the oil and gas support services sector. Our diversified business lines, nimbleness in execution and strong balance sheet put us in good stead for the coming year.”